1978 (1) TMI 150 - HC - VAT and Sales Tax

Summary

Issues:
Assessment under Punjab General Sales Tax Act, 1948 for multiple years, Reassessment proceedings under section 11-A, Compliance with principles of natural justice in reassessment, Denial of copies of affidavits to petitioner-firm, Duty of department to produce witnesses for cross-examination, Legality of reassessment order.

Analysis:
The petitioner-firm, a registered dealer under the Punjab General Sales Tax Act, underwent assessment for the years 1967-68, 1968-69, and 1969-70. Subsequently, reassessment proceedings were initiated for the mentioned years under section 11-A based on sales to unregistered dealers. The first reassessment order was challenged in a civil writ petition, where it was held that cancellation of registration certificates must be notified in the official Gazette to have penal consequences. Another challenge was raised against the reassessment order for 1967-68, leading to a subsequent order of reassessment. This order was further challenged in a writ petition, resulting in cancellation due to non-compliance with principles of natural justice. A subsequent appeal by the State against this decision is pending.

During these proceedings, fresh notices for reassessment were issued for 1968-69 and 1969-70, citing no sales to specific dealers as grounds. The Assessing Authority declined the petitioner-firm's request for copies of affidavits from these dealers, leading to reassessment orders against the firm. The petitioner-firm contended that denial of copies violated natural justice principles and hindered their ability to contest the claims. The court held that the firm was entitled to copies of documents forming the basis of action against them, emphasizing the importance of providing an opportunity for the firm to present its case.

Furthermore, the court highlighted the duty of the department to produce witnesses for cross-examination in reassessment proceedings. It was deemed unacceptable for the department to shift the burden of serving witnesses onto the assessee, especially when negligence in service could be attributed to the department. The failure to allow proper cross-examination and denial of essential documents rendered the reassessment order illegal. Consequently, the court set aside the reassessment order and directed a remand to the Assessing Authority for lawful proceedings, emphasizing compliance with due process.

In conclusion, the court allowed the petition, setting aside the reassessment order and subsequent appellate orders, with a remand for lawful proceedings. The petitioner-firm was directed to appear before the Assessing Authority on a specified date, with no costs awarded in the matter.